Case Law Details
Norton Lifelock Inc. Vs DCIT (ITAT Pune)
The assessee sold software licenses to end users in India which was claimed as not chargeable to tax. The Revenue treated such amount as Royalty income. We thus primarily need to decide the nature of income earned by the assessee from the sale of software licenses as to whether it is business income or Royalty income. In case it turns out to be business income, the same would escape taxation as admittedly the assessee did not have any PE in India. In the otherwise scenario, the same will be chargeable to tax.
In this case be it a case of sale to the Resellers or the Distributors, the assessee only transfers Symantec Products to them. It is not as if the Distributors or the Resellers acquire any right from the assessee to copy the software and then exploit it commercially. Their transactions are confined to purchasing specific Symantec Products from the assessee and then eventually selling the same to the end customers in India. There is no qualitative difference between the direct sales made by the assessee to its customers in India, which have already passed the scrutiny by the Tribunal in assessee’s own case for earlier year and the sales made by the assessee through the Distributors or the Resellers. In both the sets of circumstances, it is only one-to-one sale of the Symantec Products by the assessee and at no stage the right to use the copyright in the software is licensed either to the Distributor or the Reseller. Thus, the decision taken by the Tribunal in the context of direct sales made by the assessee to end customers in India applies with full force insofar as the sales through Distributors and Resellers are concerned. That being the position, we hold that the income earned by the assessee from sale of software, either directly to the customers in India or through Distributors or Resellers constitutes its business income and not the Royalty income. As admittedly the assessee did not have any Permanent Establishment in India, such income will not magnetize Indian taxation. We, therefore, overturn the impugned order.
FULL TEXT OF THE ORDER OF ITAT PUNE
This appeal by the assessee lays challenge to the final Assessment Order dated 23-08-2017 passed by the Assessing Officer (AO) u/s.144C(13) read with section 143(3) of the Income-tax Act, 1961 (hereinafter also called ‘the Act’) in relation to the assessment year 2014-15.
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